On the Company adopted the Stock Plan ( Plan”). The Plan is designed to supersede and replace the Plan, effective as of the adoption date and set aside shares of the Company’s common stock that be granted under the Plan.

 

During the year ended the Company granted stock options to employees with exercise prices ranging from -  

 

During the year ended the Company granted stock options to employees with exercise prices ranging from -  

 

The Company’s stock trading price is the basis of fair value of its common stock used in determining the value of share-based awards. To the extent the value of the Company’s share-based awards involves a measure of volatility, it will rely upon the volatilities from publicly traded companies with similar business models until its common stock has accumulated enough trading history for it to utilize its own historical volatility. We use the simplified method as to calculate the expected term of stock option grants to employees as we do have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term of stock options granted to employees. Accordingly, the expected life of the options granted is based on the average of the vesting term and the contractual term of the option. The risk-free rate for periods within the expected life of the option is based on the U.S. Treasury -year yield curve in effect at the date of the grant. 

 

The Company has computed the fair value of all options granted during the years ended and using the following assumptions:

 

		Year Ended December 31,
		2017				2016
Expected volatility			42%			42%	-	45%
Expected dividends			None				None
Expected term (years)		5.5	-	7			7
Risk-free rate		1.98%	to	2.20%		1.19%	-	1.68%
Forfeiture rate			20%				20%

 

The information below summarizes the stock options:

 

		Number of Shares				Weighted Average Exercise Price				Weighted Average Fair Value				Weighted Average Remaining Contractual Life
Outstanding at December 31, 2015			477,459			$	4.30			$	2.01				8.7
Granted at market price			660,000				3.22
Exercised			(37,824	)			1.88
Cancelled			(146,560	)			4.34
Outstanding at December 31, 2016			953,075			$	3.66			$	1.86				6.9
Granted at market price			295,286				4.31
Exercised			(206,875	)			1.76
Cancelled			(37,570	)			5.11
Outstanding at December 31, 2017			1,003,916			$	4.18			$	1.87				8.1
Exercisable at December 31, 2017			287,230			$	5.37			$	2.38				7.4

 

The intrinsic value of the Company’s stock options outstanding was at

 

For the years ended and stock-based compensation expense for stock options was and respectively.  Unrecognized stock-based compensation expense for stock options for the year ended was which is expected to be recognized ratably over the next years.

 

During the Company granted restricted stock awards to members of the Board of Directors. The awards have been granted under The Joint Corp. Incentive Stock Plan pursuant to the Director Compensation Policy of the Company. The awards shall vest on the earlier of (i) year from the Grant Date and (ii) the date of the next annual meeting of the shareholders of the Company occurring after the Grant Date, for each to earn shares of common stock. The estimated fair market value of these shares was valued at per share, based on the Company’s stock trading price, totaling approximately to be recognized ratably as the stock is vested. 

 

During the Company granted restricted stock awards to members of the Board of Directors. The awards have been granted under The Joint Corp. Incentive Stock Plan pursuant to the Director Compensation Policy of the Company. The awards shall vest on the earlier of (i) year from the Grant Date and (ii) the date of the next annual meeting of the shareholders of the Company occurring after the Grant Date, for each to earn shares of common stock. The estimated fair market value of these shares was valued at per share, based on the Company’s stock trading price, totaling approximately to be recognized ratably as the stock is vested. 

 

 

The information below summaries the restricted stock activity:

 

Restricted Stock Awards		Shares
Outstanding at December 31, 2015			339,288
Awards granted			86,415
Awards vested			(162,440	)
Awards forfeited			(170,848	)
Outstanding at December 31, 2016			92,415
Awards granted			59,700
Awards vested			(76,070	)
Awards forfeited			(12,345	)
Outstanding at December 31, 2017			63,700

 

For the years ended and stock-based compensation expense for restricted stock awards was and respectively.  Unrecognized stock-based compensation expense for restricted stock awards as of was to be recognized ratably over years.

  

 

During the year ended the Company accelerated the vesting of all unvested stock options and restricted stock awards granted to the Company’s former chief development officer in connection with his separation from the Company. In addition, the Company modified the post-employment exercise period of the stock options previously granted, extending the exercise period to

 

During the year ended the Company modified the post-employment exercise period of stock options previously granted to the Company’s former chief executive officer in connection with his separation from the Company. The modification extended the exercise period to In addition, the Company accelerated the vesting of shares of the previously granted restricted stock awards that were scheduled to vest in The remaining unvested restricted stock awards were forfeited upon separation.

 

These modifications resulted in an approximately increase in stock-based compensation for the year ended

 

In the Company exercised its right of refusal under the terms of a Stockholders Agreement dated to repurchase shares of the Company’s common stock. The shares were purchased for per share or in cash along with the issuance of an option to repurchase the shares. The repurchased shares were recorded as treasury stock, at cost in the amount of The option is classified in equity as it is considered indexed to the Company’s stock and meets the criteria for classification in equity.  The option was granted to the seller for a term of years.  The option contained the following exercise prices:

 

Year 1		$	0.56
Year 2		$	0.68
Year 3		$	0.84
Year 4		$	1.03
Year 5		$	1.28
Year 6		$	1.59
Year 7		$	1.97
Year 8		$	2.45

    

Consideration given in the form of the option was valued using a Binomial Lattice-Based model resulting in a fair value of per share option for a total fair value of The option was valued using the Binomial Lattice-Based valuation methodology because that model embodies all of the relevant assumptions that address the features underlying the instrument.

 

During the option holder partially exercised the call option and purchased shares at a total repurchase price of The Company reduced the cost of treasury shares by approximately related to the transaction, reduced the value of the option by approximately and reduced additional paid-in-capital by approximately

 

During the option holder exercised the remainder of the call option and purchased shares at a total repurchase price of The Company reduced the cost of treasury shares by approximately related to the transaction, reduced the value of the option by approximately and reduced additional paid-in-capital by approximately

 

 

In conjunction with the IPO, the Company issued warrants to the underwriters for the purchase of shares of common stock, which can be exercised between and at an exercise price of per share.  The fair value of the warrants was determined using the Black-Scholes option valuation model. The warrants expire on and have a remaining contractual life of years as of

 

The information below summarizes the warrants:

 

		Number of Units				Weighted Average Exercise Price				Weighted Average Remaining Contractual Term (in years)				Intrinsic Value
Outstanding at December 31, 2015			90,000			$	8.13				2.9			$	-
Granted			-				-				-				-
Outstanding at December 31, 2016			90,000			$	8.13				1.9			$	-
Granted			-				-				-				-
Outstanding at December 31, 2017			90,000			$	8.13				0.9			$	-
Exercisable at December 31, 2017			90,000			$	8.13				0.9			$	-

 

During the Company entered into a settlement agreement, whereby it resolved a pending litigation matter. Under the terms of the settlement agreement, the Company agreed to a -time settlement amount comprised of cash and newly issued shares of its common stock. The amounts paid by the Company in this settlement was determined by the Company to be material. The fair value of the total consideration related to common stock was valued using the closing price of our common stock on the settlement date.